2. The costs of lawsuit shall be borne by the Plaintiff.

A. From July 2005, the Plaintiff opened a “U-TUTR” English education program for children by combining telephone and English education with the Internet lectures from July 2005, and filed a declaration of tax exemption pursuant to Article 12(1)5 of the Value-Added Tax Act, Article 30 of the Enforcement Decree of the same Act, and Article 30 of the Value-Added Tax Act, on the one hand, for two years 2005, 30,568,140, 64,709,279, 279, 2006, 238,348,122 won for the English education service (hereinafter “instant education service”).

B. On November 1, 2007, the Defendant notified the Plaintiff of the imposition of KRW 3,697,070 (including additional tax 918,155), value-added tax for the first term of 2006, value-added tax 7,182,140 (including additional tax 1,29,479), value-added tax for the second term of 2006, value-added tax 26,802,480 (including additional tax 5,136,803) for the second term of 206.

C. On May 6, 2010, the Plaintiff filed an appeal with the Tax Tribunal. On May 6, 2010, the instant educational service does not constitute an educational service subject to exemption under Article 30 of the Enforcement Decree. However, on the ground that the Plaintiff’s failure to report and pay the value-added tax was not subject to an additional tax due to justifiable grounds not attributable to the Plaintiff’s failure to report and pay the value-added tax, the Plaintiff made a decision to rectify the amount of tax for two years after deducting the additional tax (hereinafter referred to as “instant disposition”).

[Reasons for Recognition] Facts that there is no dispute, Gap evidence 1, 6 (including branch numbers if there is a natural disaster; hereinafter the same shall apply), Eul evidence 1 to 4

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition shall be revoked on the grounds that it is unlawful for the following reasons.

(1) In light of the fact that the Plaintiff obtained a separate government’s authorization for distance education (Internet education), the education service via telephone constitutes a remote lifelong education and thus constitutes an educational service permitted or authorized by the government, and the Plaintiff is exempt from value-added tax, even if the Plaintiff is a foreigner, if the Plaintiff is licensed or authorized by the government.

(2) Even if the instant educational services are subject to taxation, the telephone English education is merely an ancillary service that supplements the Internet lectures, and thus, the value-added tax should be exempted according to the Internet lectures, the main service provider of the instant educational services.

(b) Related statutes;

The entries in the attached Table shall be as follows.

(c) Fact of recognition;

(1) On May 18, 2005, the Plaintiff reported each remote lifelong education facility under Article 27 of the Enforcement Decree of the Lifelong Education Act to the superintendent of the Gangnam-gu Seoul Metropolitan Office of Education as the name of the AAAB Birver Lifelong Education Center (www.ebm.co.co.), and on August 29, 2005, the "U-TUTR" reported each remote lifelong education facility in accordance with Article 27 of the Lifelong Education Act, etc.

(2) The following are the Plaintiff’s publicity and guidance on the instant educational services on its Internet homepage.

(3) The tuition fees for online lectures and online lectures in the event that the Plaintiff does not use the phone during the Plaintiff’s lecture process are as follows.

[Reasons for Recognition] Evidence, Evidence Nos. 2 through 5, and the purport of the whole pleadings

D. Determination

(1) Determination as to whether the instant educational service is exempt from value-added tax

According to Article 12(1)5 of the Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) and Article 30 of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22043, Feb. 18, 2010), a private teaching institute permitted by the Government provides that the teaching of knowledge, techniques, etc. to students shall be exempt from value-added tax by deeming it an educational service.

Article 22 of the Lifelong Education Act and Article 26 of the Enforcement Decree of the same Act provide that the Plaintiff may conduct lifelong education, such as conducting distance education or providing various information to many and unspecified persons through information and communication media, with regard to whether the instant educational service constitutes an educational method at a remote lifelong education facility reported by the Plaintiff, Article 22(1) of the Lifelong Education Act (amended by Act No. 8676 of Oct. 17, 2007) provides that any person may conduct lifelong education, such as providing distance education to the specified or unspecified persons or providing them with diverse information. In the case of paragraph (2) of the same Article, if a person intends to conduct such education at a cost for an unspecified number of persons, he/she shall report to the Minister of Education and Human Resources Development as prescribed by Presidential Decree. Accordingly, Article 26 of the Enforcement Decree of the Lifelong Education Act (amended by Presidential Decree No. 20607 of Feb. 14, 2008) provides that any distance-based education facility that is reported to the Minister of Education and Human Resources Development Service.

Therefore, since the education service of this case cannot be subject to value-added tax exemption under Article 12 (1) 5 of the Value-Added Tax Act, the plaintiff's assertion on this issue is without merit.

(2) Determination as to whether the instant educational services are ancillary services

Article 1(4) of the Value-Added Tax Act refers to services ordinarily included in the supply price of goods or services, services deemed to be incidental to the supply of goods or services which are the main transaction practice, and services which are contingent or temporarily supplied in connection with the main business, etc. In a transaction where a number of goods or services is a single supply unit, any of them is the main goods or services and any of them is the incidental goods or services shall be determined by considering where the purpose and intent of the supply between the transaction parties in light of the mode of the relevant specific transaction (see, e.g., Supreme Court Decision 200Du9700, Mar. 27, 2001).

In light of the following circumstances acknowledged as above, i.e., the Plaintiff’s publicity of the instant educational service, i.e., telephone classes with the original language students rather than the content of the Internet lecture, emphasizing the English education focused on speaking, and promoting mainly the education using the phone among the instant educational service, and ii) the instant educational service, which is an online lecture and the online lecture using the phone, has a similar learning period, but the difference between the above increased tuition fees is obvious, and most of the increased tuition fees can be seen as being being used for the education using the phone in the instant educational area, it is reasonable to deem that the instant education among the instant educational service does not constitute the supply of services auxiliary to the Internet lecture subject to value-added tax exemption, and rather, the Plaintiff and its members have more emphasis on the education using the phone rather than the Internet lecture.

Therefore, the plaintiff's assertion on this part is without merit.

3. Conclusion

Thus, the plaintiff's claim of this case seeking revocation on the ground that the disposition of this case is illegal is dismissed as it is without merit.